Advances in Transportation Infrastructure

There is a magazine called Infrastructure Today that contains articles and information on Indian infrastructure. Its a pretty good magazine and I urge you to pick up a copy and browse if you get a chance.

The latest issue had an article on road transportation infrastructure and brought out a couple of points that were not really discussed in class.

First, for a truck traveling large distances over a tolled national highway, it is likely that there would be 5-6 toll stations in between. Stopping at each of these stations could add an extra 30 mins - 1 hr for the trucks journey. Intelligent systems that could detect and simplify/automate this process of toll collection (by reading information off bar codes present in the truck or by being able to weigh/identify the vehicle) is an area that is currently the center of a lot of attention.

Second, one of the challenges faced by developers is that the Government takes an inordinately long time to process bid documents. Developers assets are often frozen for this period and they incur some financial loss. Streamlining the approval procedure is therefore something that is required in this context.

Some facts regarding Special economic zones

Hi!
Lot of discussions are going on regarding SEZs. Just go through this as this might help people to clear their doubts.
http://www.rediff.com/money/2007/aug/25sez.htm

how microfinance can help in upliftment of rural economy -- the story of grameen

As we were discussing the concept of microfinance and how it can help in upgrading rural living standard in general, and infrastructure in particular, i thought of sharing some more details about grameen, the most famous success story in this field.
Mohammed Yunus, Nobel Laureate, started this venture in Bangladesh, one of the poorest countries of the world, back in 1974, 3 years after the country's independance, by giving a loan of 27US$ to 42 families to create small items for sale The bank began as a research project by Yunus to test his method for providing credit and banking services to the rural poor in order to reduce the rampant rural poverty in Bangladesh. It was a huge success and in 1983 it was transformed into an independent bank
Grameen is best known for its system of solidarity lending.The system is the basis for the microcredit and the self help group system now at work in over 43 countries. Although each borrower must belong to a five-member group, the group is not required to give any guarantee for a loan to its member. Repayment responsibility solely rests on the individual borrower, while the group and the centre oversee that everyone behaves in a responsible way and none gets into repayment problem. There is no form of joint liability.
Grameen's track record has also been notable, with very high payback rates—over 98 percent of 5.72 billion US$.More than half of Grameen borrowers in Bangladesh (close to 50 million) have risen out of acute poverty thanks to their loan, as measured by such standards as having all children of school age in school, all household members eating three meals a day, a sanitary toilet, a rainproof house, clean drinking water and the ability to repay a 8 US$ a week.
Another accomplishment is that among the 6.67 million borrowers, 97% are women. Thus grameen has also been effective in bringing in sort of a social reform movement.
At present Grameen has grown a family of enterprises including Grameen Trust, Grameen Fund, Grameen Communications, Grameen Shakti(Grameen Energy), Grameen Telecom, Grameen Shikkha (Grameen Education), Grameen Mothsho (Grameen Fisheries), Grameen Baybosa Bikash (Grameen Business Development), Grameen Phone, Grameen Software Limited, Grameen CyberNet Limited, Grameen Knitwear Limited, and Grameen Uddog which are all working in different sectors of rural infrastructure developement. In 2005, it went public with Grameen mutual fund one. The model is also being replicated in other countries by Grameen foundation.

for more, visit
http://www.grameen-info.org/

Japan looks to treble trade with India

In today's class professor Ashwin was discussing about the financial institutions funding infrastructure projects , of which Japanese investment in India was discussed. I have come across this article which tells about Japan investments increasing in India, almost treble and that certainly is going to pace the existing and the incomplete projects to completion. Article speaks specifically about energy sector apart from the Delhi-Mumbai Industrial Corridor .

Heres the entire article :

source : http://timesofindia.indiatimes.com/India/Japan_looks_to_treble_trade_with_India/rssarticleshow/2301509.cms

where Buddhism remains the most famous import from India, aims to treble trade with the sub-continent nation to USD 20 billion by 2010 for which it has sought early conclusion of an economic partnership pact.

Addressing MPs in Parliament, Japanese Prime Minister Shinzo Abe favoured signing of the Economic Partnership Agreement (EPA) soon to firm up relations and raise volume of bilateral trade three-fold. Trade between the two countries in 2006 was about USD 6.5 billion.

"I likewise urge the Indian side to give their support to enable the early conclusion of this high quality agreement," he said on the second day of his three day visit to the country.

He said bilateral relations are blessed with the "largest potential" for development, adding that a strong India is in the best interest of Japan and a strong Japan is in the best interest of India.

Outlining various fields in which the two countries can cooperate closely, he promised to help India in the field of energy by providing technology. But, he did not mention nuclear power.

Japan, which has been one of largest economic assistance providers to India through ODA, also wants to partner India in mega projects like the Delhi-Mumbai industrial corridor being funded by it now.

a small prognosis

Well , this is ajay. This is no excerpt from any article or journal, its the discussion of the present urban scenarioor rather the urban prognosis. With the IT boom, industrialisation,clustering of educational institutions and ofcourse lucrative careers offered by the urban india are drawing the rural india to the cities and it is envisaged that nearly 40% of the urban population would live in citiesby 2017.Even right now we are encountering the problem of traffic congestion, water and sanitation problems blah blah blah..which apparently would show some adverse effects on the next generations, for example: the traffic congestion results in increase in travel time which indeed represents excessive usage of fuel which in turn results in the depletion of the resources and the similar things with the water and sanitation etc. , though the govt. is really trying to solve the problem by developing tier 2 cities etc .,most of the industries are really reluctant to adopt to the suggested habitat, may be because of the transportation facilities and its brethren. In a word we could say that government is on a wild goose chase . But i think development of SEZ's with the residential quarters for its employees is a very good step in terms of the urbanisation issue apart from the obvious economic positive outcomes.I think its time for the strategy players to play the role in facing the crisis, they some how got to show that the further influx of either industries or the population into the cities is goint to create a real mayhem either by creating the artificial local inflation or the similar steps. Before we go for these startegies , it better we do a little goal programming as such priortising the constraints, goalsand trying to optimize them.I firmly belive that if the government approaches some good consultancy before giving their permits , making policies etc we're going to see some pleasant outcomes. Infact our stock exchange has hired Meryll lynch to do their risk analysis and accounting then why not the government hire one than just making policies and giving permits to the industry holders in an obsequious manner without foreseeing all the ramifications.

Sea link project in trouble

Hi all.
The ambitious sealink project in Mumbai seems to have ran into trouble with the differences between the parties increasing day by day. The work has been completely halted and the price escalation is more than 100% with delay in the completion by two years.
Read the full story at
http://www.dnaindia.com/report.asp?newsid=1116550

Which one to choose - A Private Builder or The State Development Authority??

Hello everyone,

This is Aditya. This articles deals with the issue that "The restrictions implemented by Supreme Court on the builders and the inefficiency of MHADA have done the damage in the redevelopment process." Have a look at this.

Cessed and dangerous, bldgs crumble as they await redevelopment

There have been around 5,000 incidents in the last five years in which buildings or parts of buildings have crumbled in Mumbai. But only 1,000 buildings have been taken up for redevelopment till date, highlighting the authorities’ apathy and residents’ and owners’ unwillingness in pushing for redevelopment.
Portions of two buildings have crashed in less than 16 hours since Friday evening, killing five and injuring a few others. The two mishaps have served to put the spotlight back on the reasons why those living precariously in the buildings choose to go on doing so despite the obvious risk to life.
Few among the occupants and the landlords of these buildings have been interested in their redevelopment but things have worsened since April 2006. The Supreme Court effectively put a cap on the profit that builders could make out of redeveloping property by decreeing they could not be given a floorspace index of more than 4 as incentive.
“Builders before that were allowed to sell 50 per cent of the redeveloped property. This limit on their profits has come as a huge disincentive,’’ Maharashtra Housing and Area Development Authority cessed buildings resident executive engineer V G Wani said.
Not a single building in the city has been put up for redevelopment since the SC verdict.
The reasons for occupants’ and landlords’ unwillingness to redevelop property according to MHADA rules are far simpler to understand. “Redevelopment often takes years when residents have to move elsewhere, to transit camps in the suburbs, dozens of kilometres from their workplace, school or college. This disturbs a whole way of life,’’ Mumbadevi BJP MLA Raj Purohit said.
Occupants also pay a pittance as rent (compared to the prevailing market rates) to stay in the best areas of Mumbai; so they often tend to ignore the very real risk to their own life and limb.
The reason for landlords’ apathy is even more obvious; they stand to gain the least from redeveloped properties, say Mhada officials.
A few instances will put things in clearer perspective. It is almost two years since Nagpada’s Sadaf Manzil crashed, killing 11 persons and injuring 29; 17 of the injured have been disabled permanently. Residents initially thought of redeveloping their building through the Mhada but then realised that it would be a futile wait and even the second generation might not see the redevelopment. So they decided to approach a private builder.
Residents of adjoining Patel Mansion, which was in a similarly dilapidated condition, agreed to a cluster redevelopment. “We appointed Abid Rizvi and Associates to carry out the redevelopment. We got a no-objection certificate from the Mhada and permission from the BMC to carry out construction. But now the builder is hesitant because of the FSI cap of 4,’’ Sheikh Latif Gaffar, a resident, said.
The hesitation stems from the fact that the builder may not be able to recover the cost of construction.
“There are 31 residents and seven commercial shops. The builder says that with an FSI of 4 he can construct upto 11 floors. So, after rehabilitating the tenants, he will be left with around six flats and these will not fetch him what he wants,’’ Gaffar said. The residents are at present living in transit camps at Wadala, Bandra and Malad.
Congress corporator from Nagpada Amin Patel points out there are 530 cessed buildings in his ward extending from Tank Street to Shuklaji Street. One hundred and eighty have been demolished but have not been taken up for redevelopment.

CESSED BUILDINGS
Old buildings in the island city are called cessed buildings because tenants pay monthly charges (known as cess) to the Repair Board for carrying out repairs; this cess is higher than the rent.
There are 16,372 cessed buildings in the city.
Vacation notices were served on residents of 71 buildings this year.



Articly Courtesy : Times of India, 19th August 2007, Mumbai edition, Page 3

factfile about SEZ

Hi all,
Here's a link to some facts about SEZs that I think might be interesting to note.
http://sezindia.nic.in/HTMLS/Fact_sheet_on_SEZs_as_on_31-07-2007.pdf



Aditi

land acquisition procedure

Hi everybody
This is Debopam Roy. As we had discussed in class, land acquisition is often the single most important risk in private financed transportation infrastructure. To emphasis how cumbersome the process is, I thought of sharing with you all the procedure for land acquisition as per the National Highways Act. the different steps of land acquisition are described in the different sections of the act, as follows:

3A(1) Notification in official gazette

3A(3) Notification in 2 local newspapers, 1 of which will be in vernacular language

3B Obtaining power to enter land for survey


3C Hearing of objections

3D Final & binding declaration of acquisition by notification in official gazette {has to be done within 1 year of 3A(1) excluding period of court injunctions}

3E Take possession within 60 days of service of notice

3F Right to enter land and do any act

3G Determination of amount payable as compensation after giving notice in 2 newspaper, inviting claims of persons with interest and resolving disputes if any through arbitration

3H Deposit of money to person entitled



So now you know why more often than not, our infrastructure projects are behind schedule.......

Special Economic Zones (SEZs)

I'm sure you would have enjoyed and learnt a lot from Vijay Sarma's guest lecture today. For those of you who are still thinking of SEZ's this website provides more information at the policy level. Of course you could just google SEZ's to get many more websites with pertinent information.

In particular, several of you were wondering as to what the envisaged benefits of SEZ's were. Here is what this website has to say about this:


"(a) generation of additional economic activity
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
(e) development of infrastructure facilities;

It is expected that this will trigger a large flow of foreign and domestic investment in SEZs, in infrastructure and productive capacity, leading to generation of additional economic activity and creation of employment opportunities."


As you can see, theoretically SEZ's can potentially confer a multitude of benefits - I think Vijay raised most of these benefits in class today. However the reality can be different. Comments?

Reg. the infrastructure crisis

Hello, everybody,

This is Sachi Chander. I was just reading through the comments left by Thejas to my previous note and discovered two very informative links given by Thejas. Seeing how they were languishing like a lost puppy in the comments box, I felt that they ought to be hightlighted. Go through the links below.

They present in-depth information regarding the infrastructure crisis. Good find, Thejas.

http://www.cbsnews.com/stories/2005/03/09/national/main678939.shtml
http://www.msnbc.msn.com/id/7137894/

“Pension fund could be used to develop infrastructure”

Hey junta! I have read this article in today's new paper. Just go trough it.
Here is the link
http://www.hindu.com/2007/08/13/stories/2007081352220500.htm

Regional airlines to boost local connectivity

Hello everybody,

This is C.S.Janardhan . Here is a very interesting policy Undertaken by the government to boost the local connectivity through airways and bring up better ways of private sector participation in airlines in the nation. The government on Thursday introduced a new category of schedule carriers — regional airlines.

These airlines would primarily provide local connectivity in the north, west, south and east/northeast by using one metro in their regions as the base for flying to other smaller towns either in the region or anywhere in India.

For starting a regional airline, the company would have to acquire at least three aircraft within a year and at the end of two years, it would be required to operate with a minimum of five planes.

"I see 200 aircraft operating with regional airlines in next five years. Currently about 80 places get flights regularly and another 100 more places can be added on this list," the minister said.

Now airlines can begin as regional carriers and if they increase their fleet size to three and five aircraft in one and two years, respectively, they can aspire to become national carriers on their performance. Moreover, Civil Aviation Minister Praful Patel said this will lead to states reviving unused airstrips or opening new airports in private participation to link them to the country.

Following are few links for more details related to the article….

http://www.hindu.com/2007/08/11/stories/2007081156661600.htm

http://timesofindia.indiatimes.com/India_Business/Now_regional_airlines_to_boost_local_connectivity/articleshow/2269573.cms

http://www.indiaprwire.com/businessnews/20070809/23830.htm

UMPP need PPPAC approval

This is sriram siddhartha. Call it the Sasan effect. All future ultra mega projects may have to get Public-Private Partnership Appraisal Committee’s (PPPAC) approval before being bid out if the finance ministry has its way.

The finance ministry has conveyed its views to the power ministry that considering the good track record of PPPAC, it should also be involved in the approval process of the ultra mega power scheme, an official source said.

The proposal for involving PPPAC in the ultra mega power scheme is aimed at strengthening its vetting process. The scheme got almost derailed over the Sasan project controversy where the first winning bidder Lanco-Globeleq had to be declared invalid after the completion of the bidding process.

Both Sasan Power, the special purpose vehicle of Power Finance Corp (PFC) overseeing the project, and Ernst & Young failed to identify problems in the bid document of Lanco-Globeleq for the Sasan project till the project was awarded to the consortium. It is now felt PPPAC with experience in handling large infrastructure projects would strengthen the vigilance mechanism, preventing Sasan-like lapse.

At present, the bids are invited and scrutinised by PFC, appointed as the nodal agency to implement the scheme. After the proposed changes are implemented, PPPAC may evaluate future projects for deviation from rules and regulations before giving its nod. The body may also evaluate the projects at the inception stage when a site is identified and other linkages are given to it.

source - Economic Times

India may change power equation in Lanka

Hello everybody,

This is C.S.Janardhan , writing about a very interesting article on the indo – lankan submarine cable link. According to this article power deficit India may soon become a major energy supplier to neighbouring Sri Lanka. It is expected that the project could be completed in just few months. Once commissioned, this line could transmit seasonal surpluses existing in the country which at times could not find domestic buyers. Well the trade does seem to bring out some serious troubles within our power deficit nation but it seems that PTC expects a win-win situation for both the nations as the submarine cable link could also be used for transmitting any power surplus existing in Sri Lanka in future to power deficit India. Following is the link for the article. Just check it out for detailed information.

http://economictimes.indiatimes.com/India_may_change_power_equation_in_Lanka/rssarticleshow/2269882.cms

Reg. the infrastructure crisis

Hello, everybody,

This is Sachi "GC" Chander, writing about the collapse of the Mississippi bridge ( the M-bridge, henceforth ). We were told by Dr. Ashwin about this when he mentioned the infrastructure crisis that has gripped America. A day after the Hindu reported the incident, the newspaper carried another interesting piece that cited official sources declaring that more than 70,000 bridges are just as structurally deficient as the M-bridge. The costs of maintenance and repair are expected to reach nearly 200 billion dollars (!) . Further statistics and comments can be read here .

http://www.hindu.com/2007/08/04/stories/2007080456111600.htm


This gives an insight into the widespread nature of this crisis. However ,less than a day after the incident, preventive measures are being taken in the preliminary form of assessing and estimating the level of risk with other structures. One has to appreciate the damage assessment as well as damage control measures taken by the nation.

Transmission & Distribution

As thejas had already posted the details of installed power capacity and additions, I would like to talk about transmission and distribution.

Unification of regional grids has been envisioned by engineers from long time. The idea has come to lime light only few years back i.e, Indian Government initiated activities recently. Integrated National grid shall evacuate additional 1, 00,000 MW by the year 2012 and carry 60% of the power generated in the country. The existing inter-regional power transfer capacity is 9,000 MW, which is to be further enhanced to 30,000 MW by 2012 through creation of “Transmission Super Highways”. For creation of such a grid, an investment of Rs. 71,000 Crore is envisaged. Out of this, Rs. 50,000 Crore is planned to be mobilised by POWERGRID and remaining Rs. 21000 Crore is envisaged through private sector participation.

The T & D losses have been consistently on the higher side, and are presently in the range of 18% to 62% in various states. The aggregate technical & commercial (AT&C) losses are in the range of 50% (half of the power goes waste!!). Unplanned extensions of the distribution lines, overloading of the system elements shot back in terms of huge losses. All these problems had to be foreseen and proper investments if made earlier wouldn’t have resulted in this bad scenario. The commercial losses are mainly due to low metering efficiency, theft.

Coming to transmission, The Government of India has an ambitious mission of ‘POWER FOR ALL BY 2012’. To be able to reach this power to the entire country an expansion of the regional transmission network and inter regional capacity to transmit power would be essential. The latter is required because resources are unevenly distributed in the country and power needs to be carried great distances to areas where load centres exist.

http://powermin.nic.in/ would give you more details.

The story of an IIT prof

Regarding the Telecom network that we will soon discuss in the class i found a article that we can be proud of !
kindly read this
http://specials.rediff.com//money/2007/aug/08jhun1.htm

Hydel power - the best option ?

Hi all.

According to the latest facts [June 20th, 2007] of Power ministry of Govt. of India, the country has 1,34,716 MW of installed power generation facility, out of which 52% is state sector, 34% is central and 14% is private.
Also, 65% is thermal and 25% is hydel. This is where we need to look at.
India is harnessing only 17 % of it's potential hydel power, whereas countries like Norway [58%], Canada [50%] and Brazil [ 31%] are way ahead.
The Indus basin has 20000 MW potential, yet to be harnessed, Ganga basin has 11000 MW and the Brahmaputra has 35000 MW. Fortunately the previous central government realised the importance of this and came out with a plan of 50,000 MW power generation by 2017. This initiative has started with the preparation of feasibility report and detailed project report. 162 hydroelectric schemes have been identified with an aggregate installed capacity of 50,560 MW. They are located in sixteen States of the country. Of these, 106 schemes aggregating to about 39,000 MW are located in only four States namely Arunachal Pradesh, Uttaranchal, Himachal Pradesh and Jammu & Kashmir. These projects under this Initiative are proposed to be taken up for execution during 11th & 12th Plans i.e. between 2007-2017.
And there is a whole set of budgetary and infrastructural and governmental initiatives being taken to exploit the hydel resources.

But the social issues keep haunting with people like Medha Patkar and Arundhati Roy [ Aamir Khan being the latest addition] staging protests every other day against such massive projects. Also, one major strategic fear with the Government of India is China's claim every now and then [ the latest being last month] that Arunachal is theirs. [ remember, Arunachal is the biggest contributor in hydel sector ].

Every developmental project in this country is so, a political, social, environmental, diplomatic, strategical, regionally chauvinistic and deadly opposed by the Left.

Tidal Power

Someone (Silesh) had mentioned Tidal Power in class. We aren't really concerned with the technology, but we're more concerned about the economics of generation. Wikipedia has this to say about the economics: http://en.wikipedia.org/wiki/Tidal_power#Economics

From the article:

"Tidal power schemes have a high capital cost and a very low running cost. As a result, a tidal power scheme may not produce returns for years, and investors are thus reluctant to participate in such projects."

As it is, our SEBs are running under huge losses and power sector in India is not in a very good financial position. To spend a large amount of money on establishing Tidal power schemes is hardly feasible. Also, the largest Tidal Power Plant has an installed peak power of 240 MW with an annual production of 600 GWh which is hardly a lot. To set up many such plants for our requirement of power would involve a huge amount of money.

Unless we come up with new technology, tidal power is not feasible, and we are better off looking at conventional methods of power generation.

Resources on Indian Infrastructure

Hello and Welcome to this blog. For those of you who are interested in knowing more about the infrastructure scenario in India, I would recommend reading the India Infrastructure Report - brought out by the 3i Network . The 3i's are IIM Ahmedabad, IIT Kanpur and IDFC. This is an annual publication that contains a good review of policies and actions that were initiated in the infrastructure sector over the recent past, as well as several thematic, thought provoking articles.

Another good resource on Indian infrastructure and India's growth trajectory in general, is the website of the Indian Planning Commission which contains several draft reports and copies of India's 5-year plans. A particularly interesting read is the Approach paper to the Eleventh Five Year Plan 2007-2012 which outlines the Indian governments preferred areas of focus for the next five years.